(Image: Procare)
This growing medical aid problem in South Africa is becoming increasingly difficult to ignore. Young South Africans are increasingly moving away from private medical schemes, either because they cannot afford to be in one or were never able to join in the first place.
It may seem like a personal budget decision, but industry experts say it's causing a huge headache for the entire healthcare system.
Discovery first sounded the alarm last year, when CEO Adrian Gore warned that the group's flagship Discovery Health Medical Scheme (DHMS) was showing signs of worrying demographic change. Essentially, members are getting older, sicker and more expensive to treat.
Discovery says the average age of DHMS members has increased from 32.3 in 2008 to almost 38, while the proportion of members suffering from chronic diseases has more than doubled, reaching almost 32% in 2024. The reason for this has to do in part with how young, healthy people are leaving the system.
This matters because Medical Aid plans rely on a balancing act: younger members with fewer claims help offset the higher health care costs of older members. When that balance begins to deteriorate, premiums begin to increase.
Luyanda Njilo, senior equity research analyst for healthcare at Nedbank Corporate and Investment Banking, says the pressure is only going to intensify in 2026 as the support base continues to shrink due to South Africa's youth unemployment crisis. Angelo reported that youth unemployment has increased from about 36% in 2015 to 45.8% in the first quarter of 2026.
“So young people are not getting into the Medical Aid scheme and people who are in the Medical Aid scheme are dropping out,” he said.
The knock-on effect is described by Angelo as a spiral. As fewer younger members remain in schemes, Medical Aid is forced to spread rising health care costs across a smaller, older membership base, which pushes up premiums further, making cover even less affordable and prompting more people to drop out.
Medical Aid contributions have long been rising faster than inflation, and Discovery says annual Medicare inflation over the past decade has averaged CPI plus six percentage points.
Angelo believes that if the current trajectory continues, the affordability shortage could become more severe within the next five to 10 years. “If we continue on this trajectory, it will become extremely impossible for people to maintain the Medical Aid scheme.”
Middle-income South Africans may feel the greatest pressure. Njilo cited SARS data showing that about 52% of beneficiaries earn between R200,000 and R500,000 a year, a group that is already vulnerable when salary increases lag behind premium increases.
“If you continue to increase premiums at about 10% while their salaries are growing at 3%, 4% inflation, it becomes increasingly unaffordable for them to maintain the medical aid plan and as a result, they will drop out.”
Angelo argues that the debate around National Health Insurance (NHI) does little to resolve the immediate affordability issue facing private health care. “The NHI will still be funded by the same people as it is funded through the tax base. So it doesn't necessarily solve the current problem,” he said.
Instead, he says the long-term answer lies in economic growth, more formal employment, and a health care model that focuses less on expensive hospital treatment and more on prevention and early diagnosis.
“we need to jobs increaseEspecially large scale formal employment. So we need GDP growth for this,” he said.
Overall, this is a symptomatic cause that needs to be addressed before it gets completely out of control.
(Source: businesstech)